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ALTERNATIVE INVESTMENT | Staff Reporter, China

Published: 16 Sep 13

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BRIC-based firms suffer serious trust deficit in developed markets

Here's why domestic investments are snubbed.

According to a release, the inaugural Emerging Markets Supplement to the Edelman Trust Barometer reveals that companies headquartered in Brazil, Russia, India and China (BRIC) suffer a serious trust deficiency in developed markets.

According to the supplement, which focuses on the issues and opportunities facing BRIC-based multinational corporations (MNCs), just over one-quarter (27 percent) of respondents in the key developed markets of the U.S., UK, Germany and France say they trust BRIC-based MNCs. China-based companies rate particularly low among German (19 percent), French (22 percent) and U.S. (26 percent) respondents.

“Brands are built over a long period of time and most BRIC-based companies are new to developed markets,” said Richard Edelman, president and CEO, Edelman.

“People aren’t familiar with these brands or their CEOs. And many suffer from a negative perception around governance, supply chain management and treatment of employees. People no longer just buy products; they buy the corporation behind the products.”

There are consequences for this deficiency in trust within developed markets. Nearly two-thirds of respondents in developed markets would reject domestic investment from companies based in any given BRIC market.

Only one-third of developed market respondents say they would trust a China-based business to “buy a company in your country” (34 percent), “buy a minority share in a company in your country” (36 percent) or “make a major investment in a new plant or office in your country” (38 percent).

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